Why is the Strait of Hormuz off Iran so crucial?
The Strait of Hormuz is considered the world's most critical chokepoint for the oil trade. Iran has repeatedly threatened to block the waterway and now is partially closing it for military drills
Iran on Tuesday announced it would partially close the Strait of Hormuz at the mouth of the Persian Gulf, a critical waterway for the world's oil trade.
Iranian state television framed the closure as a "security" measure due to military drills by the country's Revolutionary Guards, which began a day earlier.
It was unclear how long the partial closure would last. The Associated Press reported that the curbs would last several hours.
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Iran has repeatedly threatened to close the strait, signalling that it can disrupt the key maritime artery that carries a fifth of the world's oil.
The curbs come as Iranian and US negotiators on Tuesday hold their second round of talks about Iran's nuclear program in Geneva.
The US has ramped up its military presence in the Middle East in recent weeks to pressure the Islamic Republic over its nuclear ambitions and the bloody crackdown on anti-government protests.
What's the current situation in the strait?
The Strait of Hormuz is a key waterway that lies between Oman and Iran, and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
The US Energy Information Administration (EIA) describes it as the "world's most important oil transit chokepoint."
At its narrowest point, the waterway is just 33 kilometers (21 miles) wide, with the shipping lane just 2 miles wide in either direction, making it crowded and perilous.
Large volumes of crude extracted by OPEC countries like Saudi Arabia, the United Arab Emirates, Kuwait and Iraq from oil fields across the Persian Gulf region and consumed globally flow through the strait.
Around 20 million barrels of crude, condensate and fuels are estimated to flow via the waterway daily, according to data from Vortexa, an energy and freight market consultant.
Qatar, one of the world's largest producers of liquefied natural gas (LNG), relies heavily on the strait to ship its LNG exports.
Shipowners increasingly wary of using Strait of Hormuz
Last year's conflict between Israel and Iran put renewed focus on security in the waterway.
In the past, Iran has threatened to close the Strait of Hormuz for traffic in retaliation for Western pressure.
During the 12-day war in June, however, there weren't any major attacks on commercial shipping in the region.
But shipowners remain wary of using the waterway and some vessels tightened security while others canceled routes there during the conflict, the AP news agency reported.
Electronic interference with commercial ship navigation systems surged around the waterway and the wider Gulf during last year's confrontation, naval sources told Reuters news agency.
Any lasting blockade or disruptions to oil flows could trigger a sharp spike in crude prices and hit energy importers hard, particularly in Asia.
Who will be most affected in case of supply disruption?
The EIA estimates that 82% of crude and other fuel shipments that traversed the strait went to Asian consumers.
China, India, Japan and South Korea were the top destinations with these four countries, together accounting for nearly 70% of all crude oil and condensate flows that traversed the strait.
These markets would likely be most affected by supply disruptions.
How will a closure affect Iran and Gulf states?
If Iran were to take concrete action to fully close the strait, it could potentially spark military intervention from the US.
A longer-term closure could also jeopardize Tehran's ties with Gulf Arab states like Saudi Arabia and the United Arab Emirates — countries with which Iran has painstakingly improved relations in recent years.
Moreover, Tehran itself relies on the Strait of Hormuz to ship oil to its export partners, making it counterproductive to close the strait, say experts.
"Iran's economy heavily relies on the free passage of goods and vessels through the seaway, as its oil exports are entirely sea-based," Reuters cited JP Morgan analysts Natasha Kaneva, Prateek Kedia and Lyuba Savinova as saying during the conflict. "Cutting off the Strait of Hormuz would be counterproductive to Iran's relationship with its sole oil customer, China."
Are there alternatives to the Strait of Hormuz?
Gulf Arab nations like Saudi Arabia and the UAE have sought alternative routes to bypass the strait in recent years.
Both countries have set up infrastructure to transport some of their crude via other routes.
Saudi Arabia, for instance, operates the East-West Crude Oil Pipeline with a capacity of 5 million barrels per day, while the UAE has a pipeline linking its onshore oil fields to the Fujairah export terminal on the Gulf of Oman.
The EIA estimates that around 2.6 million barrels of crude per day could be available to bypass the Strait of Hormuz in the event of disruptions in the waterway.
